Shares of Warren Buffett’s Berkshire Hathaway hit the record high on Tuesday, rising as much as about 1% on receding fears of a rating downgrade, even after the legendary investor’s $9-billion bid to acquire energy transmission firm Oncor fell through earlier this week. Berkshire Hathaway Inc’s Class A shares of the rose as much as 0.9% and hit the all-time high of $2,70,960 on Tuesday. Warren Buffett-led Berkshire Hathaway has outperformed the benchmark index Dow Jones Industrial Average by 3% over the last one year, returning about 21% versus 18% gain in Dow Jones Industrial Average.
Berkshire Hathaway’s market capitalisation rose almost $4 billion in a single day to $444.14 billion, after the global credit rating agency S&P affirmed its “AA” rating on the firm — its third-highest grade — with a “stable” outlook. The Class B shares of the 178-year-old diversified investment-to-insurance firm Berkshire Hathaway also advanced 1.18% to $180.45.
Warren Buffett failed to clinch a $9 billion takeover of Texas-based utility Oncor earlier this week, which prompted S&P Global Ratings on Tuesday to say the billionaire’s Berkshire Hathaway Inc is no longer at risk of a credit rating downgrade. Sempra Energy struck an agreement with Oncor’s bankrupt parent Energy Future Holdings Corp on a $9.45 billion purchase, topping Warren Buffett’s bid. The rating agency had put Berkshire on review for a possible downgrade on 7 July reflecting concern about how adding Oncor would affect leverage.
Few US companies have credit ratings as high as Berkshire’s, which itself carried a “triple-A” rating from S&P as recently as February 2010. Moody’s Investors Service rates Berkshire “Aa2,” equivalent to S&P’s rating.
At Berkshire’s annual meeting in May, Vice Chairman Charlie Munger suggested that the Omaha, Nebraska-based conglomerate might be capable of a $150 billion acquisition. Buffett responded that he was more “conservative,” though he has long expressed a preference for buying whole businesses over making smaller investments. He turns 87 on August 30.
Meanwhile, US stocks ended higher on Tuesday, with each of the three major indexes posting their best one-day percentage gains in over a week, as lawmakers’ comments on tax reform and the debt ceiling boosted investor optimism.
The Dow Jones Industrial Average rose 196.14 points, or 0.9%, to 21,899.89 points, the S&P 500 gained 24.14 points, or 0.99%, to 2,452.51 points and the Nasdaq Composite added 84.35 points, or 1.36%, to 6,297.48 points. At the close, 335 stocks hit new 52-week highs while 300 hit fresh 52-week lows across all U.S. exchanges, marking the first time in 10 sessions that more stocks have hit highs than lows.